By Cristal Cody
Tupelo, Miss., March 6 - Roche Holding AG caused a stir on Friday by increasing its bid for Genentech Inc. to $45.7 billion, or $93.00 a share, in order to get the deal done.
But shareholders may hold out with key trial information about Genentech's cancer drug due in April, an analyst told Prospect News.
Shares of Dow Chemical Co. and Rohm & Haas Co. jumped after the two confirmed they are in talks ahead of a trial set to start Monday.
Meanwhile on Friday, Whole Foods Market, Inc. settled with the Federal Trade Commission over the challenge to its acquisition of rival Wild Oats Markets, Inc., and the commission is encouraging a buyer to step forward for 32 soon-to-be divested supermarkets.
On Wall Street, Friday marked a mixed day for stocks.
The Dow Jones Industrial Average rose 32.50 points, or 0.49%, to close at 6,626.94.
The Standard & Poor's 500 index inched up 0.83 points, or 0.12%, to 683.38, and the Nasdaq Composite index lost 5.74 points, or 0.44%, to close at 1,293.85.
Genentech shareholders plan next move
Genentech shares gained $9.22, or 11.29%, to close at $90.86 on the news of Roche's higher offer.
The new bid is up from the $86.50 a share Roche had offered for control of the remaining 44% of Genentech shares it does not own.
The Swiss biotech company means business.
"Based on conversations with Genentech shareholders, we believe that there is a strong sentiment to bring this process to a conclusion," Franz B. Humer, chairman of the Roche Group, said in a statement Friday. "As a result, we are increasing our price ... and will proceed quickly to complete all necessary financing."
Roche extended the tender offer for shares of the South San Francisco, Calif.-based drug company to March 20.
However, key trial information about Genentech's cancer drug Avastin is set to be released in April.
"Shareholders are going to be looking for higher prices," Jason Zhang, an analyst with BMO Capital Markets, said in an interview Friday. "It's an interesting chess game."
About 500,000 shares had been tendered as of Thursday, Roche said.
"Investors will have to readjust their decision today about the new bid," said Zhang, who has targeted the takeover price at $100.00 to $105.00 a share. "Before today, very few investors were considering tendering their shares for $86.00 and half."
In a statement Friday, Genentech's board urged stockholders to take no action on the new offer until it releases a formal position, which is expected "promptly."
Dow, Rohm & Haas hole up for weekend talks
Investors pumped Rohm & Haas' stock up $9.79, or 18.13%, to close at $63.80 on Friday.
Dow's stock gained 64 cents, or 9.89%, to close at $7.11.
The companies said in a joint statement that they could not predict the outcome of the discussions.
Rohm & Haas filed suit after Dow failed to close the $78.00-a-share acquisition of the company in January.
Dow, a Midland, Mich.-based diversified chemical company, had made the offer in July 2008 with a 78% premium for Philadelphia-based Rohm & Haas, which creates products used in a range of industries including electronics, transportation, medical and food.
Dow had planned to help fund the deal with proceeds from a joint venture in Kuwait, but the venture fell apart.
Last month, the company took its first quarterly dividend cut in 97 years.
Whole Foods turns over Wild Oats' rights
Investors sent shares of Whole Foods up 30 cents, or 2.55%, to $12.08 on Friday after the natural foods and organic grocery chain said it reached a settlement agreement with the Federal Trade Commission.
The FTC has been dogging Austin, Texas-based Whole Foods over the $700 million acquisition of rival Wild Oats Markets of Boulder, Colo., in August 2007.
Under the settlement, Whole Foods must sell 12 Wild Oats stores and one Whole Foods store currently in operation and 19 stores that are closed and relinquish the Wild Oats trademarks and intellectual property associated with the Wild Oats stores.
An appointed third-party divestiture trustee has six months to market the assets, with extensions available.
The FTC, in fact, is looking for a buyer to step forward and start up a natural foods chain.
"In addition to requiring the transfer or divestiture of all rights to 32 stores, Whole Foods also is required to divest related Wild Oats intellectual property, including unrestricted rights to the Wild Oats brand, which retains significant name recognition and loyalty among consumers," the FTC said in a statement on Friday.
"These assets will allow one or more commission-approved buyers to re-establish competition with Whole Foods. The newly divested stores also could provide a springboard from which an acquirer might expand into other geographic markets."
The FTC said the settlement restores competition in 17 geographic markets.
Whole Foods said in a statement that it expects to take a $19 million non-cash charge in relation to the sale of the 13 operating stores.
The FTC is expected to issue a final ruling on the settlement on April 6.
Mentioned in this article:
Dow Chemical Co. NYSE: DOW
Genentech Inc. NYSE: DNA
| Roche Holding AG: | Swiss: RO
|
| Rohm & Haas Co. | NYSE: ROH
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| Whole Foods Market, Inc. | Nasdaq: WFMI
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